Who switched energy suppliers in The Big Switch and why?

In 2012 Which? and 38 Degrees launched the UK’s first and largest collective energy switch. With 145,000 people taking part, this provided a unique opportunity to analyse real life switching decisions.

At the Centre for Competition Policy – part of the University of East Anglia – we were able to analyse the wealth of data collected from The Big Switch, as well as carrying out a series of follow-up questionnaires with participants. Our aim was to get a better understanding of the factors influencing consumers’ decisions to switch energy supplier.

If you responded to one of these surveys, we want to thank you for taking part – without you the research wouldn’t have been possible.

Reasons for switching energy suppliers

We know that the potential savings are an important factor for switching, and there was a substantial average saving of £120 available to participants of The Big Switch. In total, a quarter of the people who could have saved decided to switch, collectively saving an impressive £5.5m. But this does also suggest that people’s energy switching decisions can be influenced by other factors, even where there’s money to be saved.

After getting energy suppliers to compete, the Big Switch offered the best deal on the market for the majority of the UK. However, in some cases the deal wasn’t the cheapest for particular participants. To make sure everyone saw the cheapest deal for them, Which? showed the cheapest deal in their area alongside The Big Switch offer. But displaying two offers seems to have deterred people from switching rather than spurring them on. This is a particularly interesting result; does comparing more offers make you feel informed or are too many options overwhelming?

We also found that the length of time it took actual switchers to complete the switching process was generally less than the length of time non-switchers expected the process would take. This suggests a perceived hassle factor, which puts people off switching their energy supplier.

Why do you switch?

Other reasons for people switching included: using accurate energy consumption information from their bills to generate a quote, rather than just estimating it; taking part with the aim of saving money rather than just out of curiosity; and preferring the ethical or environmental stance of the new supplier.

Choosing not to switch was associated with relying on an estimate of your energy bill; facing an exit fee when leaving an energy company; and being busy during the period of The Big Switch.

Do any of the above factors fit with your experiences of switching energy suppliers? Do you find the amount of choice overwhelming or are you confident navigating the options? Is saving money the main driver for you to consider switching?

Once again we would like to thank those of you who took part in this exercise and provided survey responses. If you’d like to see the full analysis, you can download the technical report here.

This is a guest post by David Deller at the Centre for Competition Policy – part of the University of East Anglia. All opinions are David’s own, not necessarily those of Which?

I did take part in this, to see if I could get a better deal than was available to me personally on the open market. That did not seem to be the case.

I use Which? Switch to find my best deal. I record my annual usage as that gives the best estimate (there is a trade off between standing charge and unit price). I choose a fixed price tariff with no exit penalty, and initially look at separate deals for gas and electricity – not necessarily dual fuel – even from different suppliers. Once in a deal, you can change your tariff to a better one if it arises – as has happened over the last few months – very easily and quickly in my experience.

Not a big chore to make worthwhile savings. Even in joining the Big Switch you would then have, presumably, had to look for better deals as time went by. Hopefully even if they didn’t join it would persuade people to shop around.
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What I would like would be to join a collective scheme that automatically updated individual’s deals to the cheapest one currently available. How about a sequel – BigSwitch2?

I’ve been with the same supplier for years now, but change my tariff every now and again.

Switching is all well and good, but getting OFGEM to force energy companies to pass on savings in the wholesale price to all would benefit everyone, unlike the Big Switch. Oh and OFGEM should also force the energy companies to refund what essentially we’ve all been overpaying for the last 4 years. That would save way more than a switch.

Maybe we need someone like Which to show what household prices could be if the fallen wholesale price had been passed on. Then show how much lower the price will be compared all anything the ELEVEN comparison sites will list.

Apathy on the part of OFGEM should also be factored into any research findings.

Trust in the energy market also needs to contain an element of trust in the regulator and the only trust it gets from me is that it has and will do nothing for the consumer.

It’s virtually impossible to discover. Generating companies buy their fuel on the futures market at a price fixed long in advance: they also buy the dollars for payments on the future markets. This is all business confidential, so it would take a revolution to find the truth.

But we can be sure that they make loads of money and pay themselves Carribean Island sized bonuses. As many of us have been saying for many yesrs (since Thatcher sold out to businesses), the industry should be overhauled from top to bottom. Perhaps it’s time to go public!

terfar, this should be Ofgem’s job to ensure fair prices are charged. What do we pay them for? They should publish benchmark gas and electricity tariffs, for example, against which the commercial suppliers could be judged.

I switched mainly because of the appalling service I received from NPower and was originally very satisfied with the switch to Scottish Power (using Which? Switch) and was the best deal for me at the time, until fairly recently when my credit balance went over the £500 mark. Happily it has now been resolved after extensive negotiation and receipt of a letter of apology. I am on a fixed tariff until March 2015, but understand, if necessary, I can switch to another supplier within 42 to 49 days before the current tariff is due to end. I have taken certain measures which have reduced my energy consumption by turning the boiler thermostat down to minimum and lined the back of my radiators with aluminium kitchen foil to direct the heat into the room away from the walls.

Since becoming involved with Which? Big Six Campaign I have made various inquiries among friends and family regarding their energy consumption and costs and am frankly amazed at the complacent and apathetic responses received. Some of my relatives seem content to grumble and grouse when large bills arrive on computer or through their letterbox but seem reluctant to take any action and just seem prepared to accept the status quo.

One of the problems with energy (or advantages whichever way you look at it) is it`s accessibility (providing you can afford to pay your bill) and there is a tendency for consumers to take it for granted by just flicking a switch, until heaven forbid we get a power cut (which coincidentally we have just experienced as soon as I started typing this post!) With other commodities such as petrol and food we have to make a concerted effort to leave the home and fetch, making on the spot important choices and decisions as to what to buy and how much we are prepared to spend. Even shopping online for groceries can be quite eventful, especially when you go to checkout and find you have ordered `doggie doo bags with tie handles` when you don’t even have a dog!

I admit there is only so much consumers can do to challenge the energy giants but ultimately it is a matter for the regulators to restore fairness and stability to a very unbalanced and unjust energy market system.

Congratulation to the author and his team. Which? for grown-ups! Serious analysis of the reasons why people act and why people do not act to reduce energy costs. The report is worth reading, particularly if you debate energy costs!

Two caveats. A minor one is the the report is not dated which may seem trivial but does have a bearing if a post report event appears to have been ignored.

I had hoped that I would read of Que Choisir action in 2013 where it signed up 100,000 members swiftly as it had already negotiated the discount ahead of the offer. AFAIR the Big-S was more chicken and egg and I think the French concept much more marketable and attractive.

”
Recall indeed that the initial offering of the winning supplier (13% for minimum savings compared to the rates regulated by the kWh of October, or 13.5% compared to the regulated rate of sale of November) is only a starting point: a supplementary reduction (on the price of the kWh and an additional lump sum reduction) is planned on the basis of the number of registrants on the gazmoinscherensemble.fr site. More there will be registered, more final offer will be attractive financially: UFC – that choose intends to create a real market of consumers power. Their mobilization must therefore enable to earn 1%, 2% or more of additional discount as a supplementary individual discount amount also depends on the number of registered.

This final offer price is fixed for one year in contrast to the rate regulated sales who plays, he, every month. Similarly, anxious to ensure, beyond the gain in purchasing power, a certainty to policyholders, “cheaper gas together” initiated by the UFC-Que Choisir includes a contract course, more protective of consumers that those typically charged, as well as the involvement of the Federation in the treatment of any claims.

So to boost competition in the gas market, and reduce (finally!) the gas bill, the UFC-Que Choisir invite consumers to continue to register until November 25, on the http://www.gazmoinscherensemble.fr site”

I switched from e.on to Scottish Power in May 2013 after being notified of a collective switching scheme promoted by the local council. It was a long drawn out process, partly because the deadline for expressing interest was extended. There was a lack of coordination between what I was asked to do by email and could achieve using the Scottish Power website. I had to call SP several times, but SP were very helpful.

The real benefit of switching has been that SP is managing my direct debits better than e.on ever did and I am no longer having regular visits from meter readers despite providing my own readings promptly. I used to have to call e.on regularly to ask for refunds and/or to reduce my direct debit, whereas I have not yet needed to call SP with this sort of request. I’m not too optimistic because of Beryl’s experience, which she has mentioned before. At the end of the one year fixed price contract I decided to go with another one year fixed price contract rather than have the frustration of another switch. Looking at the offers on the price comparison websites, I saw that my contract was not even mentioned.

It is time to end the complicated energy market and have simple unit prices so that no-one needs price comparison websites or to make phone enquiries to find out if they could buy energy more cheaply. We can see the price of fuel when we drive past garages and we can see the price of groceries in supermarkets. A significant proportion of the population is elderly and many are no longer in a fit state to make price comparisons, though some could manage if presented with a list of prices from different suppliers.

Thanks to privatisation of our energy industry, life has become more complicated for the consumer and the extent to which energy is now in the hands of other countries concerns me. On the basis that energy is vital to all of us and pricing is complicated, I would like much more control of the sector by government.

“We can see the price of fuel when we drive past garages and we can see the price of groceries in supermarkets.”

But to get the cheapest you need to look round quite a few fuel stations (using up fuel), and who surveys all their local supermarkets to get the best price? Some are good for certain products, have deals on others, and make bigger profits on the remainder. As an example – bought Marvel dried milk for breadmaking today from our local Tesco. for £3.70. At Iceland it is £2.50.

Commercial organisations wil never offer simplicity. If they did, everyone would shop at one supermarket, buy their fuel from one outlet, and their energy from one supplier. Then they’ve got you over a barrel.

As for government control these are (and were) the people who sell their properties and lease them back from offshore companies who pay no tax, pay twice what they needed to for guaranteed electricity generation (let alone the extortionate deal for nuclear done with EDF), entered (and still do) into very expensive PFI deals to cheat the books, and on it goes.

Yes, it can be all very depressing if you let it get to you.. I’d choose the lesser of the evils – some sort of competitive market.

I imagine most of us drive past various filling stations and can decide if it is worth filling up. Likewise, we probably have a good idea of how much things cost if we buy them regularly and have the option to buy something else or go somewhere else if grocery items look expensive.

The chance of a genuine competitive market for energy supplies seems to have long gone.

That is entirely the point Wavechange makes. The fact that we have to consciously make the effort to go out and compare prices not only makes us more aware of the competition out there but also increases our ability to make choices. Energy and water are not the same because they are automatically channelled into our homes and so we are not so consciously aware of the competition that is available on a regular basis.

Perhaps our energy meters could be adapted with an extra display so they run like petrol pumps with a tariff price per unit indicated and a rolling price to pay. If we’re spending billions on smart meters let’s do the whole job. For an extra tweak in the electronics we could also switch suppliers.

I don’t see we need to be made aware of competition; most of us have become much more savvy as choices have increased as,for example, through on-line shopping.

At 14p a mile you soon lose any advantage in shopping around for fuel – and in my area the cheapest fuel is not necessarily at the same station.

Supermarkets change their deals regularly, so even when you buy often you will not know you are getting the best deal.

At least with energy you can check your best deal on the internet without moving, any time of the day or night, with any of the suppliers. You can then change if it suits you with little effort. I am with EDF – they regularly email me if there is a cheaper deal than I am on – not only their deals, but other suppliers as well. Last night I changed from one of their fixed deals to another in a minute to save £50 a year. I don’t think that is a bad facilty to have.

mysupermarket lets you check best prices without having to roam round all your stores.

So most are aware of the competitive market and have the means to exploit it – if we choose to.

You are an excellent example of what is possible but the aim of the exercise, as I understand it, was to get a better understanding of the factors influencing consumers` decisions to switch or not to switch.

Beryl, I may have misunderstood your comment, but the principal benefit to energy users of the Big Switch as presented by Which? was, I assumed, to put an especially attractive energy deal together that a lot would change to. Those that bothered to take part would not have thought it only a research survey. UEA, in turn, gained valuable information on consumer behaviour.

I am not sure how useful the information is – although the report made interesting reading (well, the bits I looked at). One issue seems to me to be highlighted – consumer apathy. This has been raised in previous conversations – such as why people don’t change their current account provider. Many moan about various institutions, but the thing that maybe matters is to how big that moan really is. If it is not too big we don’t change.

I also wonder how many participants, like me, did not use it to switch but were independent switchers anyway and used the Big Switch as another “comparison tool”?

I agree with your comment re consumer apathy. My question is; do you know the reason for it?

David Deller makes the point:

“Our aim was to get a better understanding of the factors influencing consumers` decisions to switch energy supplier. Choosing not to switch was associated with relying on an estimate of your energy bill, facing an exit fee when leaving an energy company, and being busy during the period of The Big Switch.”

Only the second answer as far as I am concerned was a valid reason, the first and third I would regard as more excuses. People do not always understand themselves the real reason why they are so reluctant to switch but the sad fact is, some people are unable to tolerate change and the older one gets the less likely you are to want to change I accept there are always exceptions but common sense tells me that in accepting the status quo, nothing changes and exploitation continues unabated.

It is encouraging that we have consumer organisations such as Which? and researchers at our universities interested enough to investigate these matters as the road ahead can often be long and hard, but without them people would have no voice and democracy as we know it would be a thing of the past.

Beryl, I cannot quibble with what you say. We are an apathetic, or perhaps cautious, nation maybe – see how we treat elections for example with poor turnouts. Either we feel we can change nothing, so why bother, or we simply don’t feel strongly enough about the issues to get off our bottoms.

I think it is sad, given that it has never been easier to get better deals – energy, banking, for example – that more do not take advantage. Perhaps it needs a cultural change. It would likely lead to a change in business practise if we became more aggressive and discriminating purchasers.

Having said this, on-line shopping does show how determined many are to seek out bargains – young or old. Perhaps someone could investigate why we seem much more active in that area. It seems we are reluctant to change longer-term arrangements rather than immediate single purchases. Is that because we are generally comfortable with the arrangements we have made and the financial incentive is insufficient (as UEA hint)?

But as so many comversations show there are people who do not want this, and want the state to intervene – taking decisions for us. It is a valid stance, but one I do not feel is either realistic or healthy.

c nichol – One reason for suggesting state control is for the benefit of many people who are not really in a position to look after their financial affairs. On Monday I will attend the funeral of a friend’s wife who was 75 years old and I think he is older. It’s going to be a while before he gives any thought to energy prices. Those suffering from cancer, a brain tumour, Alzheimer’s disease and so on are hardly likely to keep an eye on energy prices. Those who have been made redundant, are having family problems or suffering stress at work could be among the people that might be considered apathetic. Is it right that those who are not in a position to look after their financial affairs – either temporarily or permanently – should just be disregarded?

Many thanks for your insightful and empathetic reply. I have however found an excellent article by Rosabeth Moss Kanter, Professor at Harvard Business School which c nichol could relate to from a business and leadership point of view @hbr.org – Ten Reasons People Resist Change Sept 25 2012.

I hope I am not veering too far from topic but this article does provide valid answers to the questions raised regarding consumer apathy.

Thanks Beryl. Some people need to realise that the problem is more than apathy and that as the population ages we will have an increasing number of people who are not able to shop around to avoid paying over the odds for energy.

This has led me to wonder what energy tariff rates are used in such computations as the Retail Prices Index and the Consumer Prices Index which feed into the calculation of welfare benefits and state and some occupational pensions. It would be unfair if it was assumed that only low tariffs available through switching and tracking should be the yardstick. It is one thing for people to keep on top of their shopping costs if they have to take the money out of their pocket or purse, but such people may not be in a position to manage their energy expenditure so easily, especially during cold weather with the risk of getting a massive bill. Something can surely be done to ensure that a ‘default’ tariff is the most suitable. It is amazing how many householders have to struggle with these things on their own, not just in far-flung rural areas but in major conurbations too; understandably their health and their family take priority over poring over comparison websites even if they had the means and the know-how to do so.

I don’t believe state control works. It is used for political purposes rather than for the benefit of individuals, and they are not particularly competent anyway. Have they benefited us with rail fare increases, extortionate electricity subsidies, an over-managed health service, Royal Mail sell off, smart meters……? So why put our trust in their help here?

My view is that family, charities, friends, local advice centres, should help those are are unable to deal with these matters themselves. A culture I would like to see in the UK is, where families exist, for them to feel a willing responsibility to look after their own. Not a culture where reliance upon the state is the first option.

Beryl, “Ten Reasons People Resist Change “. I’m afraid I don’t relate to this. I have been to courses in the past from academics extolling the virtues of and barriers to change. In my view, change has to be done for genuine reasons, not as one of my colleagues once said “to shake things up”. It overlooks the premise that practises often evolve through knowledge and experience developed by intelligent people. Incremental change is a good thing, but often change for its own sake is simply an assertion of authority without full consideration.

In the case of energy tariffs we certainly are comfortable with what we are used to, but given a compelling reason to change – significant cost savings for example – I would expect people to do so. If they don’t, they perhaps are not bothered, not motivated, lazy – or maybe need help to understand and manage the change. From family, friends, charities or advice centres.

It’s good theory that families should provide support. Some families do but many don’t. Expecting charities to provide support is totally unreasonable.

There is no reason why we need to run the energy industry using the same competitive system that we use to make and supply washing machines, for example. Earlier you suggested benchmark energy tariffs so that we can see how suppliers shape up. That would be worth trying but my view is that the government should set the maximum retail price that companies can charge.

“Expecting charities to provide support is totally unreasonable”. By charities I was thinking principally of the CAB – surely one of their functions? Not unreasonable to expect them to help people who need it?

“Other reasons for people switching included using accurate energy consumption information from their bills to generate a quote, rather than just estimating it, taking part with the aim of saving money rather than just out of curiosity and preferring the ethical or environmental stance of the new supplier.”

As with most intelligent debates there is always another side and it helps to understand in this case the reasons why some people switched and others did not. I think that has been established. There are a multitude of reasons why people do what they do or don’t do, but it helps to be able to see the other side even if you don’t agree with it.

Unless competition can restored to the energy market change will not happen. A general election in May this year will be the deciding factor. It will take a Labour majority I think to take control of our energy supplies, unless the CMA can pull something out of the bag and produce a solution that will end the enduring crisis in the energy market.

Beryl, I’m not sure how this relates to what I have said. I do “see the other side” and neither agree nor disagree with it, it is simply the way some people behave. Understanding reasons (e.g. for not changing) is one thing; I have, perhaps clumsily, given some reasons I think why they have not made a change that would be advantageous. But what matters surely is people being better convinced that change of supplier or tariff could benefit them, and that the benefit can normally be achieved cheaply (in terms of effort).

I do not think this should be a political issue. Politicians look for votes and bribe the electorate to get them. If Labour’s pledge last year “to freeze gas and electricity bills until 2017” had been enacted, would the recent reductions in tariff costs not then have happened?

You talk of a “crisis”. There have been far bigger “crises” building over the last few years in other more expensive essentials – food, housing and commuting, each probably up to 5 times the cost of domestic energy. Perhaps some attention to those would be appropriate?

It was the government that introduced the smart meter rollout so they are “in control”. The only benefit in principle I can see, for domestic consumers, is the ability to charge by time of day. So, if you organise your main consumption off peak you will get a cheaper tariff, and minimise the need for excessive generating capacity. To pretend that we will all routinely monitor our consumption and then reduce how much you use is, I believe, not very believable.

I would rather smart meters had been limited to industrial and commercial users, and the fortune otherwise spent on domestic consumers used to improve insulation and more efficient use of energy, thus reducing consumption (and their bills).

I agree that the money spent on smart meters could have been more usefully spent on insulation and other measures to help the public cut their energy consumption.

Hopefully those with storage heaters are already using off-peak electricity. I am not at all happy about suggestions that washing machines and tumble driers are used overnight when electricity is cheaper. There is a small but significant risk of house fires, whatever brand of appliances you buy.

If the government is in control then let them demonstrate how smart meters will help consumers. As I see it, only the energy industry will benefit significantly. Somehow I expect we will still be grumbling about being hundreds of pounds in credit with our energy suppliers, though I look forward to being proved wrong.

We switched from Scottish Power to CooperativeEnergy and were delighted. The switch over definitely saved money and not long after that fixed term offer expired, CooperativeEnergy introduced a new ‘Fair & Square’ tariff with yet another bid drop in prices. So overall, we are delighted with switch.

the wholesale cost of electricity – “year ahead” prices – has been pretty stable. So the only justifiable increase in electricity bills should be down to in-house costs, government regulatory, social, environmental, transmission. smart meter costs etc – which is what generally are being blamed. Bills have, in fact, increased by 9% (DECC).

the wholesale cost of gas has fallen around 19%, so should have reduced bills by around 9%, less the non-fuel increases cited above. Bills have in fact increased by 7.6% (DECC)

All the energy companies replied in a somewhat similar vein. Ofgem appear to have accepted this and not questioned its validity. I’d expect to see a dual fuel bill around 4.5% cheaper than 2 years ago due to fuel costs only. So have these other non-fuel costs increased sufficiently to justify the above figures?

It seems to me that if these figures are correct someone should be asking some real questions to justify them. Ofgem seem reticent at doing this. Which? – if you agree with them can you not put the question to the right people?

All letters I agree are in a similar vein with much emphasis on wholesale prices, blaming hedging practices, increases in transmission costs and Govt levies for failing to pass on price reductions.

A bit of good news for some. E.on have today announced a reduction in prices. Will the others follow suit and is it enough? According to this evenings BBC News, energy companies are beginning to ‘feel the heat’ (pardon the pun) of political pressure. However, MP’s are to debate on energy wholesale costs being passed on some time tomorrow. It should be broadcast on the BBC Parliamentary Channel if anyone is interested.

There seems a strong streak of paternalism and the state is/should provide running through the thread. It is a streak I have and fight now and then to look at rational and practical answers.

People with different mindsets may not get very excited about energy costs and for us we regard this as wrong, dispiriting, apathetic,etc. and make the changing to a cheaper tariff an important marker.

The British are brilliant at complaining and incredibly lazy in doing anything else. A hope that a politician or some magical body will save them some money by legislating no doubt.

If we accept that there are practical limits for the individual bills and look at the big picture where Government abdicates from long-term planning on energy supply ending up with private firms providing quick expensive fixes – changing THAT would be beneficial to all.

I agree with you entirely but, further to your final paragraph, I think we also need to look at how much of each household’s energy bill is actually something they can influence. I don’t think it is appropriate the way certain politicians and media have characterised the general failure to switch suppliers as apathy, or laziness, or some other form of delinquency. Except at the margins, many people don’t think it is worth switching and have other things to worry about; I would say that nearly everybody has done something to fine-tune their consumption and improve their home insulation to the best of their capability and their financial resources. The government has failed to find a way of making life better for the tens of thousands of people who are having to live in aged structures that defy all viable means of keeping the heat in, or who out of force of circumstances are living in oversized property where energy bills are but one of their major problems. So long as every household in the land has massive government surcharges applied pro rata to their energy accounts there is no fairness. Personally I think the closer we can get to bills that relate directly to consumption without complicated add-ons, discounts and standing charges, and have no perverse incentives for higher consumption, the better it will be. I know this has been debated here many times and I respect contrary opinions and justifications so long as they are not framed entirely out of self-interest.

I am hoping the political battle-ground that is now being prepared will include a household energy campaign. The outlook is not very encouraging at the moment and it is difficult to see through all the party political posturing and other irrelevant distractions. We need a tribune of the people to set the agenda: perhaps there is a role for Which? here. The Chancellor of the Exchequer, to a massive round of applause from the better-off, reins back the road fuel duty escalator and effectively abandons it; the Treasury obviously did not have its fingers on the pulse of global oil supplies and prices as the pittance of relief afforded by the government has been completely upstaged by the incredible drop in road fuel prices. Keeping a progressive duty level would have provided the funds to do something dramatic on domestic energy instead of something pointless on motor fuel. Adding insult to injury of course, the falling pump prices are damaging the fiscal plan into the bargain but that can’t be helped. One consolation is that the cost of heating the home is at least much more exposed now as an issue.

About 10% of an energy bill is Govt regulatory costs, smart meters, but excluding vat.
It is tempting to say we should pay for energy only what it costs – fuel, suppliers costs and profit, transmission costs, vat. Similarly with road fuel. However the government revenue lost would then have to come from somewhere else – like vat and income tax, corporation tax.

Just how do we share out the cost of running the country fairly? I’d like to see the main political parties come clean as to what fairer tax system they would implement instead of tinkering with mansion tax, allowing profits to go untaxed offshore, higher rate tax rebate on pension contributions. But they would be unpopular with influential lobby groups if they change the status quo.

Yes that is the quandary. It is quite obvious that those running the country, and those aspiring to run the country but who made a mess of it last time, do not have the unfettered intellectual wherewithal to come up with a rational scheme of income and expenditure that is fair and achievable. Bearing down heavily on public expenditure is a good starting point, but it’s no good [in fact, it’s downright harmful] if what remains still gives poor value for money; that is half our present problem and it has to be tackled with as much urgency.

I do not know the regulated price arrangements in France but Que Choisir is proud of being a militant consumer association and it looks like they can really negotiate well.
It would be interesting to know how their first deal worked out given it promised a definite saving.

Offer cheaper gas together

Lower prices: 12% minimum saving compared to the regulated tariff kWh of gas from January 2015
A secure contract
The UFC-Que Choisir at your side

The “cheaper gas together” campaign, conducted by the UFC – Que Choisir, is designed to foster the emergence of an attractive financially, sitting on contractual terms negotiated by the association and ensuring treatment of any complaints involving the UFC-Que Choisir. Then we must mobilise, and together, to reduce the gas bill.

A collective switch – provided a large enough group did it – should be an attractive proposition for one of the smaller energy companies (who should be able to offer more competitive rates, but in my experience don’t). Even then, unless the reduced tariffs were significant, we’d need to check to ensure they remained cheapest through a Which Switch type online route, particularly while wholesale prices are volatile.

I’d much rather Ofgem got a grip on benchmarking what domestic energy prices should be and let us see whether or not our supplier is giving a fair deal. Is that too much to ask? Or are there too many vested interests inhibiting Ofgen action – see the June letters from the major suppliers and Ofgem’s apparent acceptance. Even EONs 3.5% reduction – less than wholesale gas price reductions should allow – was met with a “this is a small step in the right direction” from Ofgem – presumably having taken its dentures out. 🙂

British Gas announced this morning a 5% cut in energy prices (average £37 off your bill) following E.on’s 3.5% cut last week. With an overall wholesale price reduction of 30% this is definitely a step in the right direction but is it enough and will more companies follow suit?

Here’s the quote that we’ve put out in response to British Gas’ announcement:

Which? executive director, Richard Lloyd, said:

“Every little helps, but this is another modest price cut for consumers in response to a significant shift in wholesale prices. Energy bills are consistently the number one financial concern for households, so we now need other suppliers to do more to help people struggling with the cold.

“The Competition Authority’s investigation must look at whether falling wholesale energy costs are passed on fairly, or whether a lack of competition leaves us all out of pocket.”

Thanks Patrick, I had to pop out so missed Richard Lloyd. If another energy makes a better offer could we see a return to some competition in the market perhaps, or maybe I am being a little over optimistic. I will be switching next month so will wait in anticipation!

As has been said so many times before, so long as gas bills contain major elements that are not commensurate with the wholesale price of gas then it is impossible to see clearly whether price fluctuations on the tariff bear a correct relationship to the ups and downs of the wholesale market. The same applies to electricity generation costs which nowadays are more closely influenced by wholesale oil and gas prices than when coal was the main fuel and relatively stable in price. Imported and UK coal are still used but there is also biomass, nuclear, wind and solar inputs so the picture is more complicated. Nevertheless, there is a widespread belief that the suplliers are much slower in lowering tariffs than they are at raising them to reflect global prices [and they always plead that their price-hedging and forward buying policies protect us from wild swings in prices]. There is also the problem that afflicts most major bureaucracies that it’s esier to expand the administrative and technical tail when things are on the up than to contract it when things go into reverse; there is an organisational tendency to take the opportunity of falling input prices to protect or even bolster the margin by keeping the output price artificially high. Let’s hope that the Competition Authority’s inquiry tackles this.

John, I believe that only items directly relevant to the energy we consume should be included in our tariffs. Subsidies, green levies, smart meter costs for example should be financed from other sources (we’d have to decide where, of course). Essentially your bill should consist of consumption-related costs – raw fuel prices, profit, transmission charges and vat – plus a minimum fixed charge to cover e.g. your account administration, meter reading costs. Ofgem should examine benchmark costs for both these so we can see if we are getting a fair deal. Company efficiency would determine how competitive the were. what I don’t want to see is a distorted marked created for political, ideological or populist ends.

I totally agree with you. These external elements need to be financed from the Exchequer. As ever, the source of funding and its relationship to the reductions in energy bills would be where the devil will hide.

At the risk of sparking some controversy, I would suggest dog food as a good source of extra taxation. Reading the other day that there are around 8.5 million dogs in the UK, and if they all eat a standard 400g tin of dogs’ dinner a day [on average], and on the basis of what goes in comes out, that’s a massive 150 kilos per dog per year [or 127,500 tonnes in total], having to be processed through the waste disposal services [except for those that go in the woods of course] and yet no contribution is made towards these costs to society. I know there would be the usual claims for reliefs – old ladies, old dogs, gamekeepers, monarchs, sheep farmers, huntsmen, policemen, and so forth – but it’s worth looking at.

I agree about dogs too, but what about horses? It is a legal requirement that dog walkers clean up after their dogs (which most comply), but horses are still permitted to defecate all over the public highway and not clear up. So how about a crap tax?

terfar, in olden days, I believe, when London (and other cities) were awash, so to speak, with horses I believe some horses were made to wear nappies to prevent soiling the streets. I understand Blackpool, Vienna, Charleston and other places currently require them by law.

When I was young, a lot of house-to-house deliveries were still horse-drawn. My mother sometimes asked me to get a pail and go out into the road to shovel up any droppings so she could put it on her rhubarb. I always preferred custard on mine, but I digress. The difference is that horse manure had a useful secondary purpose whereas dogs’ doesn’t. I appreciate that dog owners pay a lot of VAT already so the easy way to collect this extra money would be just to double the VAT on dog food – most other pleasures are subject to excise duties as well as VAT.

I’m not suggesting that we take more money from people overall than is already being paid, it’s just a question of finding a good source of revenue to relieve the hardship of those who shouldn’t have to find it as part of their winter heating bills. It would only cost dog owners an extra 50p a week but they’d have lower gas bills. I don’t know what the total value of the extras on the energy bills is, but £200 million a year from the dog obligation would be a good start.

I expect the Off-Topic Regulator will be after me if I don’t stop this.

“Horse Cars, New York City
Mid-1880s in U.S.: 100,000 horses and mules pulling 18,000 horse cars on 3,500 miles of track.
1900: 3.5 million horses in cities.
Chicago: 82,000 horses produce 600,000 tons of manure per year”

Not insignificant and presumably if collected nowdays would be a useful source of bio-gas.

Early Spring is the best time to cut prices for Energy Companies when usage drops off irrespective of wholesale price fluctuation. Question is will they increase them again in the Autumn when usage increases without regulatory intervention? Best to wait for the other companies to follow suit to see who comes up with the cheapest deal and then switch to the cheapest fixed rate.

I came across the following quote from the late great comic genius Spike Milligan (if Which? will allow it.)

“And God said “Let there be light” And there was light. But the Electricity Board said “He will have to wait until Thursday to get connected.” Little did he realise the multiplicity of ‘Electricity Boards’ consumers would be up against in the year 2015.

Hi Malcolm and Wavechange. Our tariff updates are provided by Energylinx, who are accredited by the OFGEM Confidence Code. This means that although we may not be on that list, our prices and procedures are thoroughly checked and validated by another independent organisation and the energy suppliers whose tariffs we show. You can read more about this on the Which? Switch site here: http://switch.which.co.uk/about-switch/index.html

Yes Alix – but, as I pointed out earlier today [somewhere below] the Which? Switch website doesn’t actually say that it is the Ofgem Confidence Code – after all, there might be other confidence codes out there for all consumers know [and I bet most people don’t know what Ofgem is or what the acronym stands for anyway]. So, just a little bit more transparency required, please.

Alex, Thanks. If I’d thought to look at the Which?Switch site I need not have bothered you!

Sometimes the best deal may be to buy your gas and electricity from separate companies rather than through a single company dual fuel contract. as I found a couple of years ago. Perhaps a note on the site to suggest people try this as well. It’s only a matter of saying you only buy gas, and then only buy electricity, at the start.

If Ofgem took a stronger role by posting regular bulletins on the best deals available via the media there would be no need for price comparison sites whose commission ultimately is passed on to consumers through their bills. The more independents entering the market the more confusing it will become for the very elderly and vulnerable to comprehend especially those without computer access.

Beryl, the best deals depend on your requirements. For example whether you’d like to fix a tariff for 1, 2 or 3 years. How you want to pay – DD monthly fixed, quarterly variable. Your mix of fuel usage. It does not lend itself to easy analysis, and neither does the tariff label. The simplest way is to put your own annual energy consumption into Which? Switch and you will quickly get all the offers available in ascending order of cost.

Agreed computers make it enormously easier, but they have only made things much more convenient and quick. They have added to the ways you can check costs, not detracted from them. And for the many – including many elderly – they have made keeping bills as cheap as possible a much more available reality.

Ofgem have already succeeded in simplifying the energy market by reducing the number of tariffs available, so why can’t they go one step further by keeping consumers informed with regular bulletins? I don’t know whether Which? Switch is considered an official comparison site or whether it benefits from commission so I can’t comment on that. Any method that can be instrumental in keeping prices low I am sure would be very welcome by many.

Beryl. I’ve asked Which? about the status of the comparison site. It’s the only one I’ve used though and seems excellent. I think its as easy to look at Which?Switch for information as it would be to look at Ofgem’s site if they published such information.

Incidentally, one of my energy providers emails me if a better deal (£50 a year or more saving) becomes available either from themselves or from a competitor. I don’t know how comprehensive it is in comparing all providers – haven’t tested it – but that seems a remarkably good way to be informed. Perhaps all energy companies should do the same.

So far as I can see, Ofgem has gone about as far as is sensible in simplifying the tariff structure to make it easy to compare suppliers. If there were a truly competitive market there would hardly be any need for switching – commercial pressure would ensure that prices were broadly comparable over time. Buying energy is unlike buying petrol, where the pump price is today’s price for that fuel and if you don’t want to run out of petrol you need to pay that day’s price [there might be fractional differences within a local district but usually not sufficient to justify spending much time or expense going for it]. With mains energy, you don’t get a new buying opportunity every time you need to replenish your provision: that is the benefit of mains supply for which there is a price to pay. The result is that people get stuck on a tariff which gradually becomes out of line with other tariffs [not always for the worse if market prices are moving upwards and it is a fixed-price tariff] because they have to deliberately elect to accept a new tariff offered by their supplier or to choose a new supplier. I question how much more now needs to be done to help people get the optimum terms for their preferrences apart from requiring companies to introduce a tariff that will automatically put them on the most favourable rate from that supplier whenever there is a price change. In a falling price market this could be crucial. One consequence of such a tariff would be that it would be a rolling contract so that every time there was a price change a new period would commence for the purposes of any exit penalties or other terms & conditions.

Like Beryl, I do not know for certain whether Which? Switch benefits from commissions from any switches that are executed via the website. Even though the site says it offers a “transparent and impartial way to compare energy tariffs” there is an obscurity about that aspect so, in the absence of any contrary evidence, I presume that Which? Switch does get paid for each switch. With reference to the points made by Malcolm R and Wavechange about not being on Ofgem’s list of acredited comparison site, I notice that Which? Switch says “tariff updates are provided by Energylinx . . . [which] is fully accredited to the Confidence Code to compare energy for domestic consumers”. I think it should say “Ofgem’s Confidence Code” to make it abundantly clear [or transparent even].

The big things to tackle now are really the actual prices of mains gas and electricity [they could be lower] and consequently the cost of heating an ordinary house. Whether elderly people can do tariff switching is probably a receding issue whereas what can be done to make an ordinary house more comfortaable at an affordable price remains a challenge, especially since so many properties in the UK are not conducive to additional energy saving measures due to their age and construction. As a result of their lower market value in consequence of their lower EPC rating, they tend to be occupied by people on lower incomes, often only on pensions or benefits. They can switch until they’re blue in the face but at the end of the day they will still be blue in the feet because the heating bills are still too high.

This is from the Aussie version and they are good about being explicit where there money comes from – even to how much they earn from Best Buy award take-up.

” The Compare, Ditch and Switch part of CHOICE Online gives comparative financial information on bank accounts, savings accounts, credit cards, mortgages and short-term investments. Another white label site, this service is powered by Mozo and was launched to support the Better Banking campaign. It lets consumers easily compare and switch banks. Mozo receives a payment from financial institutions for any converted referrals. CHOICE does not receive any remuneration from Mozo.”

On the 16th December 2014, Dermot Nolan from Ofgem, at a Which? event explained why energy regulation must focus on consumers which I found informative and enlightening. If this was a regular occurrence a regulated independent unbiased opinion would certainly assist in consumers making better choices when switching suppliers and maybe introduce a little trust back into the market.

There’s a new Which? petition asking me to fix the Big 6. They say Ecotricity, Ebico and Ovo lead the way. Well, they might in customer service but come nowhere near my current supplier in cost. I can tolerate occasional CS problems but cost is what matters to me. Prompted by this petition I checked Which?Switch and found my current supplier still tops, but with a new tariff that will reduce my bill by around 5% due mainly to a reduced gas price. I’ve just changed to it online.

Tariffs are changing quite often at present, particularly with volatility in the gas market. Might it be useful if, when asking Which?Switch for price comparisons, you could opt-in for a monthly update to give your cheapest current deals by email. Particularly useful when the promised quick-switching comes into force and changing tariffs more often will be worthwhile financially?

As only standard prices are scheduled to be cut presumably people on fixed tariffs will miss out as they will be penalised for switching to another supplier. This is something the CMA ought to address as this practice surely stifles competition. Regular updates on the volatility of the energy markets would be welcome as better communication and transparency would assist in the switching process, enabling consumers to have more autonomy over their energy affairs and encourage more people to switch, as long as this doesn’t add to consumers bills, but as long as there is reliance on comparison sites I fail to see how this could happen unless funded from general taxation.

Beryl, these days many fixed tariffs have no exit penalties if you switch suppliers, and certainly not when you change tariffs with the same supplier, so no problems there.

Reduced gas prices do not only show on standard tariffs, but also on fixed tariffs – a new version just appears that you switch to, as I have in a matter of minutes getting a 5% reduction.

Having put your details into a comparison site it should be simple for an email to be automatically sent advising of better deals. I already get that from one of my energy suppliers when the saving exceeds £1 a week.

Comparison sites are watched for good practice by Ofgem – they have a Confidence Code, currently being updated

Our supplier, E.On, offers penalty-free switches to lower-priced tariffs within their own tariff menu as they become available [which, as Malcolm, says has become fairly frequent lately], so it isn’t always necessary to switch to a diffferent company to get a better rate. If an alternative company’s prices are so much better, then E.On’s exit penalty of £5 per fuel is hardly a deal-breaker anyway. One consequence of switching internally is that a new contract period starts immediately putting off the day when you can make a penalty-free exit.

I agree with Beryl that at the moment there is a case for encouraging people to switch because that is the best way to make competition effective. But since energy is an essential commodity we should be at ease over it and not have to keep worrying about fractional movements in prices and changing suppliers all the time – switching is costing the industry millions of pounds a year and we’re all paying for it. Ofgem has made a useful start on consumer-biased regulation by rationalising and harmonising the tariff structures to make comparisons easier. In fact comparison websites are becoming less relevant as the myriad of tariff types has been drastically boiled down.

I saw an interesting breakdown of “the costs that make up energy bills” on a friend’s recent statement from SSE as follows: Buying the energy 52%, delivering it 24%, govt. environmental & social schemes 8%, billing, customer services & IT 6%, VAT 5%, and supply business profit 5%. So the reduction in global market prices for oil and LPG bears on only half the bill. And as has been seen recently, EDF customers won’t see much benefit because that company made a price promise to customers that anticipated increases rather than reductions in input costs. EDF entered into forward procurement contracts that looked very good at the time but have now been overtaken by falling world prices which cannot be passed through to customers [who are said to switching in droves].

Sometime around the end of May-early June the government, whoever they are, will have to give consideration to how to compensate for the fall in VAT revenues from lower energy bills and lower prices on other goods and services. Savings on the government’s own energy consumption and other purchasing won’t offset much of it so some cunning book-balancing required. I would expect it to be wrapped up with increased reliefs to the offshore oil and gas industry and putatively funded from economic growth resulting from lower input costs for industry and commerce [to the extent that that isn’t all absorbed in countering the impact of devaluation in the Eurozone].

John, Ofgem publish, monthly, an SMI (Supply Market Indicator) that shows, in an average domestic energy bill, how an average major supplier’s charges are made up. 44% gas and electricity, 23% network (transmission),7% environmental and social, 13% supplier operating,

It is estimated that “environmental and social obligations” cost us £93 – perhaps these should be funded elsewhere?

More importantly it shows that the pre-tax margin the supplier makes has increased from 3.9% in 2013 to an estimated 6% last year and a predicted 9.6% this year – that is a 2 1/2 times increase in % margin. As it is an average clearly some will make more than this. That, to me, seems an overgenerous increase in return at our expense. Should not Ofgem be stepping in here to protect consumers?

If environmental and social costs were transferred elsewhere, then the same should apply to standing charges. It’s not difficult to see that standing charges bear little relation to the actual cost of supplying gas and electricity to an individual home.

At present, those who cannot afford to heat their homes adequately are subsidising those who are heavy users of energy, for whatever reason.

Environmental and social costs are a form of tax. Standing charges should represent the fixed costs directly associated with supplying you and opersating your energy account. It costs your energy supplier to provide their operating infrastructure, reading your meter, preparing your bill, etc – these are costs that are not related to your consumption. It costs just the same to operate a high user account as a low user.

I want to see these fixed costs monitored and approved by Ofgem, kept to a minimum, and kept separate in your bill. I do not want to see vulnerable users, or any users for that matter, whether high or low, paying more in “fixed costs” than they should.

I regret the abolition of the two-tier tariff. The first units were at a higher cost than the later ones. This at least gave a choice in how we paid the standing charge, and did of course mean some low users were not paying the full cost of operating their account. But it also meant high users only paid up to a limit – not continuing to pay more than a fair share.